C. Hoare & Co.
C. Hoare & Co.
Employees: 220Total Assets: £1 billion ($1.8 billion) (2004 est.)
NAIC: 522110 Commercial Banking; 522120 Savings Institutions; 522210 Credit Card Issuing; 523110 Investment Banking and Securities Dealing; 523930 Investment Advice; 523991 Trust, Fiduciary, and Custody Activities
C. Hoare & Co. is one of England's oldest banks, and also claims to be the country's last independently operating, privately owned deposit-taking bank. Founded in 1672, C. Hoare & Co. remains a Hoare family business; all of the company's shareholder-partners are members of the family. While small by modern banking standards, with just £1 billion ($1.8 billion) in total assets and only 220 employees, Hoare's strength lies in its commitment to its niche market: catering to the banking needs of the wealthy and very wealthy. With only 10,000 customers, the company is able to offer highly personalized services unavailable at larger banks. Many of the bank's customers and their families have been clients for generations, and the bank, which has never advertised, accepts new clients only on the basis of recommendations from existing clients. Even so, prospective clients must still qualify before being taken on by the bank. C. Hoare offers a full range of banking services, including interest bearing accounts; deposit accounts; loans, mortgages and overdrafts; credit cards; electronic payments; and foreign exchanges services. The company's investment operations also include retirement and pension products. C. Hoare also operates a trust corporation, Messrs. Hoare Trustees, which offers trustee, executor, and custodial services, as well as tax completion and planning services. Alexander S. Hoare, the 11th generation at the head of the bank, serves as its CEO.
DEPOSIT TAKING IN THE 17TH CENTURY
C. Hoare & Co. stemmed from the very beginnings of the British banking industry. Anti-usury laws had prevented the development of modern banking into the 17th century. Yet the development of a monetary system based on gold and silver brought a need for a place to deposit these metals by traders and others. As goldsmiths already had vaults to safeguard their goods, they began accepting deposits of coins and other valuables in exchange for a fee. Depositors were then issued a receipt. At first, these receipts were simply used by the depositor seeking to reclaim his goods from the goldsmith. Before long, however, depositors began using the receipts, or notes, as means of making partial payments. Often enough, the gold transferred between the depositor and the recipient remained in the goldsmith's vault, and the only item changing hands was the goldsmith's receipt.
By 1633, the goldsmith notes had become accepted proof of a person's ability to pay for a transaction. More and more goldsmiths began accepting deposits, becoming known as "keepers of running cashes." By 1660, the goldsmith's notes had themselves become an early form of banknote, and were accepted as a form of money. Commonly issued as £1 and £5 notes, the goldsmith receipts gave rise to the expression "good as gold." This early banking system encouraged more goldsmiths to take deposits, and by the mid-1670s the city of London featured more than 40 goldsmith-bankers.
Because the goldsmith's notes had become an acceptable form of money, depositors rarely withdrew the actual gold backing their receipts. An important step forward toward the modern banking industry came when goldsmiths began issuing loans based on a percentage of the gold in their vaults, giving rise to the fractional reserve banking system on which the modern banking industry was founded.
The Hoare family's involvement in the London banking industry began in the 1670s, when Richard Hoare, son of a successful horse trader, completed an apprenticeship as a goldsmith. Hoare opened his own business, in Cheapside, London, under the sign of the Golden Bottle. While practicing his trade as a goldsmith, Hoare also began taking deposits and issuing notes, before developing lending and other banking services. By 1690, the banking side of Hoare's business was becoming dominant, as evidenced by his decision to move his shop to Fleet Street, already becoming an important financial and legal center in London.
Hoare quickly became a prominent banker and attracted a number of noteworthy customers, among them John Dryden, Samuel Pepys, and Catherine of Braganza, the wife of King Charles II. Hoare was later knighted by Queen Anne, and also, in 1712, became the mayor of London. Hoare's sons took over the business after his death, and continued to focus on the company's banking business. Although still trading under the "Gilded Bottle" sign, the Hoares reduced their goldsmithing activities and instead began developing their banking features. The company also used its depositor's gold for investment purposes. In the first decades of the 18th century, for example, the Hoares became prominent investors in the South Sea Company, buying its stock at a low price, and then selling its shares as that company's stock soared into the early 1720s.
The arrival of Hoare's grandson, Henry Hoare, marked the family's emergence as a dedicated bank. The third generation of Hoares guided the bank for more than 60 years, overseeing the development of new products and banking services, such as printed checks and passbooks. The Hoare family's bank became one of the city's most prominent, attracting notable customers such as the painter Thomas Gainsborough, furniture makers Thomas Chippendale & Son (who also built the furniture for the bank), and later, Jane Austen and Byron, as well as a number of prime ministers and other noted politicians and aristocrats of the day. In keeping with the bank's standing, and the standing of its customers, the Hoare family rebuilt the Fleet Street location in 1829.
With the creation of the Bank of England, banking emerged as a business in its own right, no longer directly associated with the goldsmith trade. Growing numbers of private deposit-taking banks appeared throughout the country, and by the mid-19th century the country numbered some 4,000 banks. Problems of insolvency, however, brought pressure from the British government to reduce the number of banks while increasing their scale, creating a more stable banking system.
A bank dedicated to high quality personal service is a rarity today. At C. Hoare & Co., we combine an intelligent, professional approach to banking and investment management with care and courtesy. Our exclusive service is delivered by experienced managers who know and understand their customers.
Founded over 300 years ago, we are still owned and managed by the Hoare family. Our strengths lie in our continued independent ownership, our long banking history and our commitment to providing services of the highest standard.
C. Hoare & Co., as the bank came to be known, had survived its own difficult periods. The bank's commitment to family ownership became a source of difficulties in itself. In the mid-19th century, the bank's operations came under control of Peter and Henry Hoare. Yet the two came into conflict over their differing but deeply held religious beliefs, and as a result, the operation of the bank was split between the two, with each leading the bank for six-month shifts. This difficult management structure was compounded by a string of unwise investments, leading the bank into financial problems. The arrival of the next generation of Hoares did little to help the company, in part because the sons of Peter and Henry Hoare, rebelling against their own religious education, proved to be poor managers.
THE LAST INDEPENDENT IN THE 21ST CENTURY
Faced with insolvency, C. Hoare & Co. nonetheless clung to its commitment to remain a private, independent, and Hoare family-controlled bank. Nonetheless, the bank developed a more careful system of choosing its managers, insisting the family members seeking to enter the business first develop professional experience outside of the company.
C. Hoare & Co. weathered its crisis and successfully rebuilt its business into the early years of the 20th century. The British banking sector underwent a new upheaval in the years following World War I. During this period, many of the country's smaller, private deposit-taking banks were bought up by or merged into a smaller number of larger, often nationally operating banks. C. Hoare & Co. became one of the few to remain committed to its independent, private ownership. Nonetheless, the bank underwent a restructuring at the end of the 1920s, transforming itself from a partnership to an unlimited liability company in 1929. A new seven-member shareholder structure was established; each of the bank's seven partners were drawn, however, from the pool of Hoare family members. At the time, the bank had just 20 employees.
As one of the last remaining private banks, Hoare successfully exploited its niche of catering to England's wealthy. Whereas the company counted a number of celebrities among its client base, it particularly attracted customers from the large and nearby legal industry; a number of firms became bank customers. The bank's small size, and restrained client base, allowed it to develop highly personalized services for its wealthy customers, who were often underserved at larger banks. Into the next century, C. Hoare & Co. grew steadily, building up a total assets base of more than £1 billion ($1.8 billion), administered by some 220 employees.
By the dawn of the 21st century, C. Hoare had been turned over to the 11th generation of the Hoare family, including CEO Alexander Hoare and his cousin Venetia Hoare, who became the bank's first-ever female partner. The new generation helped modernize the bank, introducing computer technology and enabling a limited level of online access for its customers. Nonetheless, the bank emphasized its personal services. As Alexander Hoare told the Financial Times : "Self-service banking is a solution to a problem we don't have—which is useless service. The customers like speaking to a human who recognizes their voice and who understands their needs."
Remaining committed to its independence, C. Hoare & Co. also resisted the temptation to expand beyond banking and offer diversified products, such as insurance. Nonetheless, in the mid-2000s the company prepared a new investment management product, a multi-manager investment fund led by Northern Trust and combining the products of two other specialist providers. As such, C. Hoare & Co. presented itself as a "manager of multi-managers." With 333 years of history behind it, C. Hoare & Co. had established itself as a modern niche player in the British banking industry.
Messrs. Hoare Trustees.
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- Richard Hoare completes his goldsmith's apprenticeship and opens his own goldsmith's shop in London, under the sign of the Golden Bottle.
- Hoare moves to new premises on Fleet Street.
- The Fleet Street site is rebuilt.
- The family partnership restructures as an unlimited liability company.
- The company launches a new multi-manager investment product.
Brown, Mark, "Hoare Enters the Modern Age," Euromoney, January 2004, p. 6.
Cope, Nigel, "Hoare Welcomes Competitors for the Posh Pound," Independent, May 29, 2001, p. 15.
Gimbel, Florian, "A History That's Still in the Making," Financial Times, November 10,. 2003, p. 4.
―――――――, "C. Hoare to Become a 'Manager of Multi-Managers' After 300 Years," Financial Times, October 20, 2003, p. 2.
Harris, Clay, "Good Luck Rubs Off on C. Hoare & Co.," Financial Times, May 26, 2005, p. 24.
Harris, Derek, "Cashing in on Tradition," The Times, October 6, 1993, p. 33.
Merrell, Caroline, "Billionaires Join Queue to Sign Up for Bank That Likes to Say: 'Maybe,'" The Times, October 22, 2005, p. 67.
Morais, Richard C., "Service Is Never Out of Fashion," Forbes, November 28, 2005.
Reece, Damian, "Hoare & Co. Suffers Profits Downturn," Independent, August 31, 2005, p. 57.